Burnet v. Commissioner, 283 U.S. 404 (1931)

U.S. Supreme Court

Burnet v. Commissioner, 283 U.S. 404 (1931)

Burnet v. Commissioner

Nos. 521 and 522

Argued April 29, 1931

Decided May 18, 1931

283 U.S. 404

Syllabus

1. Prior to March, 1913, the taxpayer held shares in one of several steel companies, owners of the stock of a company engaged in mining ore under a long-term lease. The lease did not require production of maximum or minimum tonnage or any definite payments. By agreement among themselves, the steel companies were entitled to share the ore extracted according to their stockholdings in the mining company. In 1916, the taxpayer and her co-shareholders sold their shares to another steel company, which thus became entitled to participate in the ores thereafter taken from the leased mine. The consideration for the sale was part cash and in part the purchaser's agreement to pay annually thereafter for distribution among the selling stockholders 60 cents for each ton of ore apportioned to it. Held, that until the receipts by the taxpayer under this contract shall have equalled the value of her shares in March, 1913, they are return of capital, and are not taxable in part as income. P. 283 U. S. 412.

2. Another of the vendor stockholders died in 1917, bequeathing her interest in the payments to be made by the purchaser. Held that, prior to return of the amount at which the bequest was valued for federal estate tax purposes, the payments received by the legatee are not income. P. 283 U. S. 413.

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